Dutch cabinet to compensate loss in spending power

24th August 2011, Comments 0 comments

The cabinet will try to partly compensate a predicted loss in spending power for the lowest incomes, families with children and old-age pensioners. Insiders say these groups will experience a sharper reduction then deemed desirable by the government.

The loss in spending power for these groups will in any case amount to more than one percent. Earlier this year, the Bureau for Economic Policy Analyses predicted an average loss of spending power of 0.75 percent in 2012.

The cabinet hopes to finalise its discussions on next year’s budget on Friday. Insiders expect an agreement on compensation for loss of spending power will have been reached by then. How such an agreement would be implemented and how much it would cost is not clear yet.

Finance Minister Jan Kees de Jager said on Wednesday that global economic developments would certainly affect the 2012 budget to be presented in September. The minister said government spending has increased while tax revenue has decreased.

Mr De Jager said the cabinet would not accept a further increase in the budget deficit. However, he said that additional cuts on top of the 18 billion euros included in the coalition agreement did not appear to be necessary.

© Radio Netherlands Worldwide

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